HOUSING ASSOCIATION RENTS FEAR SQUEEZE ON TENANTS AS RENTS RISE 20%

Housing association rents have risen by more than 10 times the rate of inflation, according to the National Federat...

Housing association rents have risen by more than 10 times the rate of inflation, according to the National Federation of Housing Associations.

The average rent for new housing association lettings jumped 20.8% to £43.06 a week in 1992-93 compared with an inflation rate of 1.8%.

Over the same period new tenants' income rose by an average of 5.8%.

The DoE says the average council rent is £34.

'As a result, rents are eating up 29% of the incomes of tenants moving into newly developed homes', the NFHA said.

The figures come in the wake of the government's decision to cut the average ceiling on its contribution to setting up new housing associations from 67% to 62%.

The NFHA said the cut would force associations to take out larger loans to cover start up costs, forcing up rents by a further 28% by mid 1995.

NFHA said its concern over the rent rise was heightened by speculation that housing benefit would be targeted for cuts in November's Budget.

'The government has been driving up rents by reducing grant rates for developing new homes on the basis that housing benefit will take the strain. Now they appear to be saying that housing benefit is costing too much', said Charlie Legg, head of the NFHA housing services and research department.

'It is poor tenants particularly who are being hit by these policies'.

The Housing Corporation paid £2.4 billion in capital grants to around 600 housing associations to fund new projects during 1992-93. The private sector gave another £1bn.

The figures come in the National Audit Office's new report Housing Corporation: Management of Housing Associations. It says over the past five years only half the associations have submitted their accounts to the corporation on time.

Fewer than half the large associations visited by the NAO had full time audit officers, contrary to corporation advice.

The NAO estimates associations will need £2.5bn of private investment to match around £5.4bn of corporation investment between 1993-94 and 1995-96.

'The willingness of the private sector to meet associations' borrowing requirements has yet to be tested at the level required to meet planned levels of development over the next few years', the report says.

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